Fairfax County is once again chewing on the possibility of a meals tax — and this time, it won’t need a public vote for approval.
The Board of Supervisors voted 9-1 yesterday (Tuesday) to instruct County Executive Bryan Hill and his staff to develop strategies for broadening the county’s revenue sources as it seeks to reduce the growing tax burden on homeowners. One option could be a tax on food and drink sales.
If Fairfax County moves forward with a meals tax, it would join most localities in Northern Virginia, including Arlington and Prince William counties, the cities of Fairfax and Falls Church, and the towns of Vienna and Herndon.
Fairfax County previously attempted to institute a 4% meals tax in 2016 that primarily would’ve funded public schools, but voters rejected a referendum that was required at the time for the tax to be approved.
However, in 2020, the Virginia General Assembly passed legislation that lets counties implement a meals tax of up to 6% without a referendum. The bill, which was patroned by local Del. Vivian Watts, prohibited counties from enacting the tax until at least six years after a referendum was defeated.
Though that would’ve made Fairfax County eligible to implement a meals tax starting in 2022, officials indicated in 2020 that they would hold off because of the economic impacts of the COVID-19 pandemic.
Before adopting a new budget earlier this month, board members emphasized the need to diversify the county’s revenue sources, calling the increasing tax burden on homeowners unsustainable. A shortfall in state funding for schools has also frustrated county and Fairfax County Public Schools leaders.
“Over the past ten years, real estate tax revenue has increased from 63.5 to 66% of the County’s entire General Fund revenue,” the board matter introduced by Providence District Supervisor Dalia Palchik states. “This is creating an affordability challenge for all Fairfax County residents, particularly those on fixed incomes and those who are already struggling to make ends meet in a high-cost-of-living region.”
The board directed Hill to analyze local meals taxes, detail the costs and timeline for implementation, specify any restrictions on the tax revenue and devise a strategy for engaging the community and businesses. He is expected to deliver his recommendations by Sept. 17.
Springfield District Supervisor Pat Herrity, the only member to vote against the proposal, agreed that the county should push for additional state funding, but he argued that the focus should be on identifying and addressing “inefficiencies” in the budget, not introducing a new tax.
“Residents have pretty strongly said this isn’t the way that they want to see us go,” he said during yesterday’s board meeting.
Board Chairman Jeff McKay and other supervisors quickly responded to Herrity’s comments, clarifying that the meals tax isn’t a done deal and the board matter explicitly asks staff to review “all options for revenue diversification.”
“Nowhere in here does it say the board is approving a meals tax in this resolution,” McKay said. “The only thing this does is ask us to get data.”
Dranesville District Supervisor Jimmy Bierman also sharply criticized Herrity for suggesting the county needs to raise taxes due to fiscal mismanagement, calling the accusation “complete hogwash.”
“We did look at spending this year. We did reduce spending this year. We did a reduction exercise, and we have information from that reduction exercise for what we may consider next year as well,” Bierman said.
The board approved a 3-cent increase in the real estate tax rate on April 30 that will generate an estimated $97 million in additional revenue. But the hike was lower than a 4-cent increase proposed by Hill, who had asked all county agencies to identify up to 7% in cuts to inform the fiscal year 2025 budget.
The budget and new tax rate will take effect on July 1.
“Going back to what’s actually on the table, providing us with more information about revenue diversification will help this county balance its budget in the future and reduce the reliance on the real estate tax,” Bierman said. “That’s a good thing. That’s the kind of information we should ask for.”
Herrity suggested that the county explore alternative revenue sources, such as a hospitality tax and sports tourism, instead of focusing solely on a meals tax.
But McKay countered that the board matter also allows staff to explore those options.
“It mentions all options for revenue diversification,” he pointed out, addressing Herrity directly. “You just spoke to a number of ones that you’re in favor of, but you’re voting against getting the information on those?”
Making a case for a meals tax, McKay argued that the county should capitalize on untapped revenue from non-residents dining at its local businesses. He also suggested that a portion of any meals tax revenue could be used to provide tax relief for homeowners, along with priorities like schools and affordable housing.
“We’re collecting $0 on right now,” he said. “They’re using our roads in our public transportation system. They probably work in Fairfax County…That’s leaving a lot of revenue on the table that can be used for some of the priorities that were mentioned, as well as tax relief.”
